Bursting the bubble or "golden opportunity"? Mizuho supports storage stocks like SanDisk (SNDK.US) and bets that the demand for AI chips will increase eightfold by 2028.

Notice that Mizuho Securities has raised the target price for Sandisk (SNDK.US), Seagate Technology Holdings PLC (STX.US), and Western Digital Corporation (WDC.US) because the company believes that artificial intelligence (AI) will continue to cause supply-demand imbalances in the storage market. Mizuho has raised Sandisk's target price from $1825 to $2200; Seagate's target price from $875 to $1090; and Western Digital Corporation's target price from $550 to $685. They also maintain a "outperform" rating for these three stocks. Additionally, the firm also emphasized the growth potential of Broadcom Inc. (AVGO.US) and Micron Technology, Inc. (MU.US). Led by analyst Vijay Rakesh, the team said, "We continue to view AI as a driver behind the supply-demand imbalances in the storage market, as we note that the growing demand in the 2027/28 forecast years could further pressure the market. We continue to expect, under the implicit push of HBM demand growth, that wafer starts for DRAM chips will increase by 10% and 6% year-on-year in the 2026/27 forecast year, but we also note that higher HBM loss rates will limit its growth, as we expect demand to increase by 27% and 24% year-on-year. In terms of NAND flash, we note that enterprise solid-state drives (eSSD) are the core drive of demand, and we expect total NAND demand in the 2026/27 forecast year to increase by 18% and 18% year-on-year, while wafer starts are expected to decrease by 5% and increase by 3% year-on-year, as we expect no clear indication of explicit supply online before the 2028 forecast year." Analysts mentioned that they hosted a quarterly AI ASIC roadmap conference call, highlighting several core updates. The analysts noted that, as Alphabet Inc. Class C plans to expand the application scale of TPU through partnerships with companies like Anthropic, the TPU shipment volume of Alphabet Inc. Class C in the 2028 forecast year may exceed 35 million units (compared to around 4.3 million units in 2026 and around 2.4 million units in 2025, an 8-fold increase). The analysts pointed out that this is significantly higher than their previous expectations for about 7 million units of ASIC shipments from Broadcom Inc., indicating a huge upside potential. Furthermore, the analysts mentioned that Broadcom Inc.'s total TPU shipment volume from 2026 to 2028 could reach 50 million units. Additionally, with the demand acceleration of Meta Training and Inference Accelerator (MTIA) v3/4/5, as well as the upcoming ASIC from OpenAI with Broadcom Inc. as its core partner, this will provide additional upside momentum. Given the strong momentum of the upcoming ASIC production capacity release, the analysts pointed out that they have raised their revenue expectations for Broadcom Inc. by customer division to reach $122 billion in 2027 (previously $120 billion), and introduced for the first time an expectation of $170 billion in 2028, with TPU still being its flagship product. "Buy Broadcom Inc. on dips; we believe investors' concerns about ASIC/GPU market share and competition from MediaTek are exaggerated," Rakesh and his team said. "We believe the upward momentum of TPU ASICs in 2028, as well as the upcoming ASIC chips from OpenAI/MTIA/ARM, will have a positive impact on the adoption of storage (Micron/Sandisk) and motherboard storage (Western Digital Corporation/Seagate)." Healthy correction or bubble burst? On June 5, tech stocks in the US experienced a sharp decline, especially in the previously booming semiconductor sector collectively "plunging from high altitude." The Philadelphia Semiconductor Index fell nearly 8.5% that day (with a cumulative decline of over 10% over two days), marking the largest single-day drop since March 2020, with a market value loss of over $1 trillion. For this round of sharp decline, the overall consensus on Wall Street tends towards a "healthy correction and portfolio reshuffling in a bull market" rather than the "bursting of the AI bubble." Analysts generally believe that this is a technical clearing triggered by extremely crowded positions and macro interest rate concerns, which is actually a buying opportunity for long-term investors. Mike Wilson, chief equity strategist at Morgan Stanley, believes that this position-driven sharp decline is a "healthy reset." The market cannot go straight up from the low point in March, and a correction is inevitable. Morgan Stanley maintains a constructive view on US stocks, with a year-end target of 8000 points for the S&P 500. Ohsung Kwon, chief equity strategist at Wells Fargo & Company, pointed out, "The semiconductor sector was severely overbought, which is why we saw the sharp decline. But I do not think this is the end of the semiconductor bull market." Mark Haefele, global chief investment officer for UBS Group AG's wealth management, said, "We do not think investors will lose confidence in the prospects of AI. Although tech stocks have been under pressure recently due to high expectations, the industry fundamentals remain strong." However, there are also views that the era of "blindly buying on dips" has changed. Investment giant Charles Schwab Corp stated that as the Philadelphia Semiconductor Index has nearly doubled since March, it has already priced in the expected 44.1% earnings growth for the information technology sector this year. Until confirmation of a slowdown in demand, the rise in US bond yields and the seasonal weakness in June have led institutional investors to adopt a risk-averse strategy, resulting in a temporary rotation of funds into defensive sectors such as healthcare and essential consumer goods. BTIG's chief market technical analyst, Jonathan Krinsky, had issued a warning before the sharp decline, predicting that the semiconductor index would fall over 20% from current levels after experiencing a "parabolic" rise. He pointed out, "Super-scale data center operators have been continuously increasing capital expenditures, but there will come a day when this situation stabilizes or even reverses, and by then, we may see a significant adjustment in the chip industry." July earnings season will be the next litmus test Looking at the latest analysis from major Wall Street firms, the "6/5" sharp decline in US stocks appears more like a "rapid brake" in the climax of the bull market, rather than a repeat of the bursting of the 2000 Internet bubble. Even after this brutal trampling, the year-to-date gain of the Philadelphia Semiconductor Index still remains above 70%, and the AI infrastructure "arms race" orders in the hands of tech giants have not decreased. For investors, the political and hawkish rate expectations of GEO Group Inc are short-term headwinds that cannot be avoided. The second quarter of 2026 earnings season, which will kick off in July, will be the next crucial litmus test -- at that time, chip giants will use real money and order guidance to prove to the market whether this sharp decline is an unmissable "golden pit" or the beginning of a peak.